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Kyoto is good for business
By Margaret Beckett
At the 1992 Earth Summit in Rio the international community agreed upon the UN Framework Convention on Climate Change, starting a process of negotiation that has now been underway for over ten years. Five years ago in Japan the Kyoto Protocol set out the first ever legally binding commitments for developed countries on reducing greenhouse gas emissions.
This week in New Delhi representatives of government, business and civil society from the Convention's 186 parties will assemble to put the finishing touches to the mechanics of delivering climate change projects. So we are now set to make a real difference not only to the well-being of the global climate but also to the individual's quality of life.
What does this mean for the economy? In spite of what many might think, less smoke from the world's homes and factories doesn't necessarily mean less prosperity. Apart from the social benefits of reducing the impacts of climate change, there is good business to be done in fighting global warming. The UK experience shows this.
In the UK we have made a very strong start to meeting our own greenhouse gas targets. Under our Kyoto commitment we must reduce our emissions by 12.5 per cent on 1990 levels. Not only do we expect to exceed that figure, we have our sights firmly set on reducing CO2 emissions by 20 per cent by 2020 - and achieving sustained economic growth while doing it.
But this cannot happen without active co-operation from business. We involved business some years ago in an exercise to agree on benchmarks and targets for each of Britain's major energy-using industries. These targets have now been cascaded down to individual companies, who - if they meet their targets - benefit from a discount on the Climate Change Levy we introduced in the 2000 Budget to encourage industry to use energy economically. But in parallel with this, and again in full co-operation with industry, we have set in place a UK emissions trading scheme.
In return for a share of an incentive payment from Government, UK companies have committed themselves to meeting emission reduction targets, with the flexibility to do this either by in-house measures or by trading in allowances. And a system of reverse auctions among additional companies interested in trading ensured that incentive payments from government will achieve the maximum possible emission reduction. As a result, Britain now has the world's first economy-wide domestic emissions trading system. Britain and British companies look forward to sharing this experience with other countries as trading emissions becomes the international norm.
The technology to exploit renewable energy has been with us for some time. Yet up to now far too little use has been made of it. We in Britain have been working hard to make up for lost time. The Government has set licensed electricity suppliers the target of generating 10% of all their sales from renewables by 2010: a very ambitious target considering that currently we stand at about 3 per cent. This will mean installing at least 8,000 MW of renewable generation capacity over the next seven years. To help smooth the implementation of this process, a system of Renewable Obligation Certificates has been established and trading in these is taking place. Our intention is to put the UK at the forefront of renewable energy technology.
There is plenty of scope for cross-border business co-operation too. UK and Indian engineers have worked together on energy projects from the highly efficient Richard coal-fired power plant in the 1980s, through a number of combined cycle gas turbine plants in the 1990s, to the present decade where Indian engineers are working with UK companies on energy projects throughout the world. Mott Macdonald employs close to 900 people at its headquarters in Mumbai and its offices in the major centres in India.
We are exploring new avenues for co-operation too. At the recent World Summit on Sustainable Development, the UK launched a renewable energy and energy efficiency partnership. This brings together Governments, representatives of business and of civil society, that are working to remove the barriers to renewable energy and energy efficiency, with the objective of accelerating the market development and commercialisation of these energy options.
The Clean Development Mechanism (CDM) is a particularly fruitful avenue for business opportunities. The CDM enables organisations to develop low greenhouse gas emissions projects in India and elsewhere in the developing world. Projects such as wind farms, solar water heating systems and biomass generators can bring secure supplies of electricity to remote communities, making a real difference to their development.
One of the most exciting aspects of the CDM is the encouragement it gives to the pooling of knowledge in possibly the largest shared endeavour the world has undertaken. Vast amounts of intellectual effort have been devoted to considering how best to deliver green energy projects under the CDM. Consultants have worked with governments and international organisations to help understand the actions needed for a future with rising living standards whilst controlling climate change. As one of the world's leading clean energy producers, India is well placed to benefit in global markets from the experience it has amassed.
The UK has always had a large number of entrepreneurial organisations seeking to develop and invest in low carbon projects across the world. We in government want to give them every help in doing this, and have established two offices for that purpose in addition to our existing support for overseas investment. The Climate Change Projects Office helps UK businesses develop projects under the Kyoto mechanisms, supporting companies who are accustomed to project development but unfamiliar with the Kyoto process. And the Carbon Trust provides financial support for technical development and innovation. The Trust's funding comes from the Climate Change Levy - a splendid example of recycling!
One of the most gratifying aspects of Britain's approach has been industry's willing co-operation. Increasingly companies are realising that it makes sound business sense to behave in an environmentally responsible way. Consumers care whether what they buy is made by companies who look after the environment. Market research shows that nearly half of British consumers have boycotted a product on ethical grounds at one time or another - even more have chosen a particular brand because of the producer's ethical stance. It is because of this that companies like BP are investing heavily in research and development on renewables - and letting the public know about it. The keenness of so many Indian companies to seek ISO 14000 accreditations is a welcome sign that the same message is getting through in India.
Of course there is plenty still to be done. The major investments needed to bring about the changes we seek will bring with them major business opportunities. The time is now near when all the past decade's efforts can be translated into practical steps to reduce greenhouse gas emissions and provide improved quality of life for people all over the world. It will be up to governments, businesses and civil society, working together to meet consumers' needs, to make this happen.
(The author is UK Secretary of State for the Environment, Food and Rural Affairs)
Courtesy http://www.hindustantimes.com
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